Two statements issued by the Governmental Accounting Standards Board (GASB)—Statement 103 and Statement 104—have become effective for fiscal years beginning after June 15, 2025. Here’s what school districts need to know about the updated financial reporting requirements under these two statements.

GASB 103: Financial Reporting Model Improvements

The purpose of GASB 103 is to improve certain aspects of the financial reporting model in order to enhance its effectiveness in conveying essential information. These changes, effective for fiscal years beginning after June 15, 2025, are intended to improve clarity, quality, consistency, comparability, and accountability within the financial reporting process for governmental entities.

Below are the components of the financial reporting model that have been modified under GASB 103:

1. Management’s Discussion and Analysis

• • Information in MD&A must be limited to the topics discussed in these five sections: Overview of Financial Statements, Financial Summary, Detailed Analyses, Significant Capital Asset and Long-Term Financing Activity, and Currently Known Facts, Decisions, or Conditions.
  • Analyses should explain why balances and results of operations changed, rather than merely stating the amounts or percentages by which they changed.
  • Explanations provided in the MD&A section should not be duplicated across multiple sections, and “boilerplate” discussions should be avoided. Discussions should focus on the most relevant information specific to the primary government.

2. Unusual or Infrequent Items

• • “Unusual or Infrequent items” are transactions or other events that either occur infrequently or are unusual in nature.
  • School districts must display the inflows and outflows related to each “unusual or infrequent item” separately.

3. Presentation of the Proprietary Fund Statement of Revenues, Expenses, and Changes in Fund Net Position

• • Note: Though not typical, proprietary fund statements are occasionally required for school districts operating business-type activities.
  • GASB 103 requires that governments continue to distinguish between operating and nonoperating revenues and expenses in the proprietary fund statement of revenues, expenses, and changes in fund net position.
  • “Nonoperating revenues and expenses” include:
    • subsidies received and provided,
    • contributions to permanent and term endowments,
    • revenues and expenses related to financing,
    • resources from the disposal of capital assets and inventory, and
    • investment income and expenses.
  • “Operating revenues and expenses” include all revenues and expenses that are not nonoperating revenues and expenses.
  • A subtotal for operating income (loss) and noncapital subsidies must be presented before reporting other nonoperating revenues and expenses.
  • “Subsidies” are defined as:
    • resources received from another party or fund (a) for which the proprietary fund does not provide goods and services to the other party or fund and (b) that directly or indirectly keep the proprietary fund’s current or future fees and charges lower than they would be otherwise,
    • resources provided to another party or fund (a) for which the other party or fund does not provide goods and services to the proprietary fund and (b) that are recoverable through the proprietary fund’s current or future pricing policies, and
    • all other transfers.

4. Major Component Unit Information

• • School districts must present each major component unit separately in the statement of net position and statement of activities (as long as it does not reduce the readability of these statements).

5. Budgetary Comparison Information

• • School districts must present budgetary comparison information as required supplementary information (RSI).
  • Districts must present (1) differences between the original and final budget amounts and (2) differences between the final budget and actual amounts.
  • Significant variances must be explained in notes to RSI.

GASB 104: Disclosure of Certain Capital Assets

The objective of GASB 104, which is also effective for fiscal years beginning after June 15, 2025, is to provide users of government financial statements with important information regarding certain types of capital assets. Certain assets must now be disclosed separately, by major asset class, in the capital assets note disclosures.

Below are the capital assets that must now be separately disclosed:

• Lease assets recognized under Statement No. 87, Leases,
• Intangible right-to-use assets recognized under Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements,
• Subscription assets recognized under Statement No. 96, Subscription-Based Information Technology Arrangements, and
• Intangible assets other than the three types listed above.

GASB 104 also requires additional disclosures for capital assets held for sale. An asset meets the definition of a “capital asset held for sale” if (1) the government has decided to pursue the sale of the capital asset and (2) it is probable that the sale will be finalized within one year of the financial statement date. Capital assets held for sale should be evaluated each reporting period. Governments should disclose the following: (1) the ending balance of capital assets held for sale, with separate disclosure for historical cost and accumulated depreciation by major class of asset, and (2) the carrying amount of debt for which the capital assets held for sale are pledged as collateral for each major class of asset.

Additional Guidance

RBT CPAs’ education accounting team is here to support your district as you prepare for the new reporting requirements under GASB 103 and 104. Please don’t hesitate to reach out for additional guidance and support.